Usually, when deciding to buy a car with the help of a bank, we often reach for a car loan because banks usually offer such a loan. However, there are other loans that can also help us implement our plans to buy a new car. An alternative to car loans is, for example, cash loans. This type of loan can be found in the offer of every bank because it is a basic banking product that does not require borrowers to set up repayment guarantees.
A characteristic feature of a cash loan is that we don’t have to show the bank what we want to use the money for and we can spend it exactly on what we want. In the case of car loans, this is exactly the case, at the stage of applying for a car loan, we must determine what we want to buy for this money and the bank will not give us more than the potential car will cost. For this reason, if we want to first finance the investment in our own vehicle and only then look for it, we should choose a cash loan.
Very often when deciding to buy a car, we ask ourselves which loan to use for car or cash. As it turns out, both can be used to buy a new or old car.
A cheap car loan is definitely more profitable
As it involves lower costs for the customer than it does with a cash loan. This situation is due to the fact that banks, by granting us a car loan, have a number of different collateral in the event of non-repayment, i.e. in the event that we get through to pay off our debt.
As for this type of collateral, they are usually a registered pledge, appropriation of collateral and assignment from the AC policy. As it turns out, a cash loan has a much higher interest rate, because it does not have as much collateral as a car loan, which is why banks must protect themselves in the event of our lack of repayment and it must be simply more expensive.
As it turns out, we can not always take a car loan to buy a used vehicle over the age of 10 or 15 years, while with cash loans there is no problem to buy an older long-term car. When buying a used car with a car loan, we must expect a significantly higher interest rate on the loan than when crediting a new car.
Another option is leasing
In other words, a type of lease, i.e. nothing else than renting a vehicle. Leasing involves the right, but not the obligation, to buy a car after the end of the leasing contract. In this case, two solutions are possible: financial leasing very similar to a car loan and
operational leasing is treated as a service. The difference between leasing and car loan is that in the case of leasing you will need your own contribution.